Argentina Struggles to Cut Huge Bureaucracy : Reform: Ribbon clerks, feather-bedders, double-dippers and pervasive <i> noquis </i> are targets in the drive to slash costs and slow inflation.

Bloated bureaucracies are a dismal tradition in Latin America, and Argentina’s has been among the worst. One outrageous example of superfluous civil slackers here is the noqui , as in the gnocchi of Italian cuisine.

According to a popular superstition, eating gnocchi on the 29th day of the month, after placing some money under the plate, brings good luck. Thus, a noqui is an absentee employee who rarely appears except at the end of the month when paychecks are handed out.

When President Carlos Saul Menem took office in mid-1989, he promised administrative cutbacks and reforms, but few observers thought he would make much of a dent in the massive layers of ribbon clerks, feather-bedders, double-dippers and noquis. After all, Menem was a member of the labor-based Peronist Party, which had helped overstuff government rolls in the past.

It is all the more remarkable, then, that Menem has shattered tradition by pressing ahead with an unprecedented personnel reform, which so far has canceled more than 100,000 government jobs.

“I don’t think any country in Latin America has as serious a commitment and has done as much as Argentina has in this area under democratic circumstances,” said a foreign diplomat in Argentina.

The military government that ruled neighboring Chile for 17 years led the way with drastic cuts in public employment, “but they did it by decree,” the diplomat noted.

Latin America is now a region of elected governments, and most of them have embraced policies aimed at trimming government fat that runs up fiscal deficits, feeds inflation and nurtures official ineptitude. But with few exceptions, those policies have yielded more frustration than success in the face of bureaucracies that resist shrinkage and politicians who resist cutting jobs.

Menem, however, faced extraordinary problems when he came to power: Hyper-inflation was blazing at a monthly rate of nearly 200%. His economic advisers told him that the size of the government had to be slashed, and his pollsters told him that the public would support massive reductions in the bureaucracy.

Not everyone agrees, of course. Congressman Carlos Alberto (Chacho) Alvarez, a dissident member of Menem’s Peronist Party, said the reductions have a downside. The government is increasingly understaffed for dealing with serious problems of poverty and health in the country or for regulating private business, Alvarez charged.

“It is an absent state,” he said. “It is a state that is retreating from its responsibilities.”

Menem argues that a leaner state, with a reduction in bureaucratic regulations, will lead to increased efficiency in both the government and the economy.

Beatriz Carceller, 44, was a low-level bureaucrat in an agency that audits government-run corporations such as railroads. She got her job when the agency opened in 1974, and she saw it mushroom into a bureaucracy with hundreds of employees, more than half of them lawyers, accountants and other professionals.

Carceller said nearly all of the professional employees worked in second jobs outside the agency, sometimes running their own private practices--and often on government time.

“They could come and go freely,” she said. “Some didn’t even come to the office. They are the famous noquis. They show up once a month to get paid.”

Noquis were hired and protected by their friends in the bureaucracy, according to Carceller. Their secretaries would call them at their other jobs if they were needed in the agency.

“You got used to not seeing them,” she said. “They were there but not there.”

In December, 1990, as part of Menem’s administrative reduction plan, Carceller and many other employees were offered lump-sum severance payments based on years of service if they would leave voluntarily. She and several others in her office signed away their jobs.

Carceller was to receive the equivalent of $23,000. She planned to use it to start a small gift shop with a friend. But a rapid devaluation of the inflation-ridden Argentine currency suddenly cut the value of her payment in half.

She accused the government of deceptively using the devaluation to save large amounts of severance costs. “I don’t believe in coincidence,” she said.

She lacked enough capital to open the gift shop, and her severance payment dwindled away in living expenses. Job-hunting has been fruitless so far, and Carceller is now thinking of emigrating to Spain with her 13-year-old daughter.

“Eighteen years of my life were practically lost working for the state,” she lamented.

Despite such problems, Menem’s reduction plan has benefited from the cooperation of Argentina’s most powerful union of government workers. Andres Rodriguez, the union’s general secretary, is a Peronist and a close associate of the president.

“With regard to the reform, the public employee has gone along well with this process, with understanding,” said Rodriguez.

Rodriguez said that his union has lost about 8,000 of its 220,000 members to the personnel reduction but that most of them left their jobs voluntarily in exchange for severance payments.

But Rodriguez said that if the military authorities who ruled Argentina from 1976 to 1985 had tried to make the same kinds of cutbacks, “We would have opposed it because they had no legitimacy.”

Under Menem, unions have participated in planning the reform, which includes the restructuring of civil service categories and pay levels. Rodriguez said he expects savings from cutbacks to help make it possible to increase salaries by an average of 50%. Last year, the average government salary was between $300 and $350 a month, he said.

The union also supports government efforts to institute a new merit system for hiring and promotion. “There was a lot of injustice, a question of favoritism by some managers,” he said.

The main bureaucrat responsible for reducing the bureaucracy is Hector Domeniconi, 46, the Economy Ministry’s “secretary of administrative and technical coordination.” He is an economist with a neatly trimmed beard and a modest office with an uncluttered desk. For many years, he was a union member with a mid-level job in the Labor Ministry.

Domeniconi’s task is to trim 122,000 jobs from the “central administration” of the national government. He said that number was set as the goal because the administration grew by 122,000 employees between 1983 and 1989, reaching a total of 334,000.

That total does not include uniformed military personnel, teachers or employees of government banks and corporations. Many of the corporations have cut additional thousands of jobs from their own payrolls as part of a privatization process.

Domeniconi said he expects to surpass his initial goal, cutting 135,000 jobs by 1993. “There already are 90,000 cuts,” he said.

Some critics had predicted that the job reductions would increase unemployment, which stood at more than 8% in 1989. But Menem’s economic stabilization efforts have helped stimulate growth in the private sector, and the unemployment rate had dropped to below 6%.

Domeniconi said many government employees left voluntarily and without severance pay because the government set standard working hours for all ministries and agencies. Before, employees had widely varying and loosely controlled schedules, often until 8 p.m., allowing many to hold outside jobs in the morning “or throughout the day--they came two or three hours in the afternoon,” he said.

He imposed a mandatory workday of 9:30 to 5:30, with a lunch break at noon. That forced many with two jobs to choose one or the other, and usually they kept better-paying private jobs.

Others have voluntarily retired, receiving social security pensions. Contract workers, not on the permanent payroll, have been dropped.

And some permanent employees have been laid off with pay. If those laid off have not been given a new government job within a year, the pay stops.

Many are offered retraining for other government jobs. But Rodriguez, the union leader, said the retraining program has not been properly promoted, and only about 1% of those laid off have taken advantage of it.

Some ministries have been especially resistant to reductions, notably Defense and Education. And Manuel Solanet, an investment broker who has acted as an adviser to the government on personnel reductions, said Menem’s own office has lost relatively few positions.

The Argentine presidential staff totaled a mere 15 employees in 1943, according to Solanet. By 1990, it had grown to 10,000. He said Menem has large advisory offices that essentially duplicate ministerial functions.

The presidency has been reduced by perhaps 2,000 jobs, but it remains a severely bloated appendage of the bureaucracy, Solanet said in an interview. “I don’t understand it. I have insisted a lot on this and have never had a valid reply.”

In general, he said, Menem and Domeniconi have done well. But Solanet warned of worrisome backsliding, even in the Economy Ministry, where he said bunches of new positions have been created since the reform trimmed away large areas of bureaucratic dead wood.

And, clearly, much remains to be done before Menem’s goals are fulfilled.

The national government’s five banks are still in the process of cutting 10,000 jobs, and the program for privatizing most state corporations has encountered a series of delays.

Labor protests and strikes at government-owned steel mills and banks last year forced authorities to reconsider a policy of laying off workers at state corporations before they are put up for sale.

In provincial and local government administrations, which have a combined total of about 1 million employees, reductions are just beginning. Eduardo Dualde, Menem’s former vice president and now the elected governor of Buenos Aires province, recently put all 300,000 of the province’s workers on notice for possible layoffs.